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Fair Value Measurement and Financial Instruments | 9 Months Ended
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Sep. 30, 2018
Fair Value Disclosures [Abstract] |
Fair Value Measurement and Financial Instruments |
5. | FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS
The carrying values of cash equivalents, accounts receivable, prepaids and other current assets, and accounts payable on the Company’s balance sheets approximated their fair values as of September 30, 2018 and December 31, 2017 due to their short-term nature. The carrying values of the Company’s current credit facility approximated its fair value as of September 30, 2018 and December 31, 2017 due to its variable interest rate. Certain of the Company’s financial instruments are measured at fair value using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1: | Inputs are quoted prices for identical instruments in active markets.
Level 2: | Inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3: | Inputs are unobservable and reflect the Company’s own assumptions, based on the best information available, including the Company’s own data.
The following tables set forth the carrying amounts and fair values of the Company’s financial instruments as of September 30, 2018 and December 31, 2017 (in thousands):
|  | September 30, 2018 |
|  |  |  |  |  |  |  |  |  | Fair Value Measurement Based on |
|  | Carrying Amount |  |  | Fair Value |  |  | Quoted Prices In Active Markets (Level 1) |  |  | Significant other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds (cash equivalents) |  | $ | 86,605 |  |  | $ | 86,605 |  |  | $ | 86,605 |  |  | $ | - |  |  | $ | - |
|  | December 31, 2017 |
|  |  |  |  |  |  |  |  |  | Fair Value Measurement Based on |
|  | Carrying Amount |  |  | Fair Value |  |  | Quoted Prices In Active Markets (Level 1) |  |  | Significant other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds (cash equivalents) |  | $ | 11,149 |  |  | $ | 11,149 |  |  | $ | 11,149 |  |  | $ | - |  |  | $ | - |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Convertible preferred stock warrant liability |  | $ | 478 |  |  | $ | 478 |  |  | $ | - |  |  | $ | - |  |  | $ | 478 |
The fair value of the convertible preferred stock warrant liability was estimated using the Black-Scholes option pricing model and the following inputs and assumptions as of July 2, 2018 and December 31, 2017:
|  | July 2, 2018 |  |  | December 31, 2017 |
|  | Series E |  |  | Series F |  |  | Series E |  |  | Series F |
Estimated fair value of convertible preferred stock |  | $ | 26.41 |  |  | $ | 26.41 |  |  | $ | 9.57 |  |  | $ | 11.01 |
Exercise price |  | $ | 19.55 |  |  | $ | 9.73 |  |  | $ | 19.55 |  |  | $ | 9.73 |
Remaining term (in years) |  | 4.5 |  |  | 2.6 - 6.5 |  |  | 5.0 |  |  | 3.1 - 7.0 |
Risk-free interest rate |  | 2.7% |  |  | 2.6% - 2.8% |  |  | 2.2% |  |  | 2.0% - 2.3% |
Expected volatility |  | 43% |  |  | 43% |  |  | 43% |  |  | 43% - 44% |
Dividend yield |  | 0% |  |  | 0% |  |  | 0% |  |  | 0% |
The following table presents the changes in Level 3 instruments measured on a recurring basis for the nine months ended September 30, 2018 (in thousands):
Balance at December 31, 2017 |  | $ | 478 |
Change in fair value |  |  | 1,396 |
Reclassification to additional paid in capital |  |  | (1,874 | )
Balance at September 30, 2018 |  | $ | - |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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